Great Depression 1929
The Great Depression was a multi-year collapse of output, prices, and banks after the 1929 crash, amplified by the gold standard, Fed errors, and a wave of bank failures — the defining 20th-century crisis.
Definition
Equity prices peaked in 1929; the depression was the 1930–33 contraction: ~25% US unemployment, a third of banks gone, a collapse in nominal GDP. Friedman–Schwartz emphasize money; Kindleberger emphasizes international gold and lender-of-last-resort failure; Eichengreen emphasizes the gold-standard straightjacket. All three channels were real.
Why it matters
Every modern backstop (deposit insurance, a committed LOLR, abandoning a rigid metallic peg in a slump) is a Depression lesson. ‘Let it purge’ was the policy error.
Case
1930–33 banking waves, the 1931 sterling crisis, and the 1933 US bank holiday. Countries that left gold earlier recovered earlier. The 1933–35 US financial reforms rebuilt the plumbing, not just the level of stocks.
How to read it
Do not stop at the crash chart. The crash was a week; the depression was a monetary and banking collapse. Ask what happened to deposits, the money multiplier, and the external constraint.
Key papers
Landmark references with real publisher or arXiv links — not token-overlap noise.
- A Monetary History of the United States, 1867–1960Friedman, Schwartz · 1963 · Princeton / NBERThe monetary interpretation of 1929–33.
- Golden FettersEichengreen · 1992 · OxfordGold standard as the international amplifier.